NXP looks to a robust quarter as Freescale-buy buoys sales

NXP Semiconductors NV has recently announced that its ₹81,081.08 crore ($12 billion) acquisition of Freescale Semiconductor Inc. is now making some profit as the company projected revenue for Q2 that generally exceed analysts' expectations.

NXP said it expects sales for Q2 to be between ₹15,540.54 crore ($2.3 billion) and ₹16,216.22 crore ($2.4 billion), the mid-point of which exceeds the consensus of analysts' expectations of ₹16,216.22 crore ($2.34 billion). The company said it expects its performance to be lifted by strong sales of automotive products.

NXP also reported sales and profit for Q1 that narrowly beat Wall Street's estimates. The company reported sales for Q1 of ₹14,864.86 crore ($2.2 billion), up 38% compared with the previous quarter and up 52% from 2015.

Figure 1: Clemmer: NXP boasts an attractive automotive portfolio.

"I'm extremely pleased with the significant progress we've made in the last few months relative to the [Freescale] integration," said Richard Clemmer, NXP's CEO. "We continue to execute associated with that and things are going very smoothly, especially on the product synergies and bringing the portfolios together."

Citing a recent research firm from market watcher Semicast Research, Clemmer said NXP is now the No. 1 supplier of automotive semiconductors globally following the Freescale acquisition. The company has a 14.5% market share in automotive semiconductors, according to Semicast, more than four percentage points better than the next closest competitor, Infineon Technologies AG.

Clemmer and other NXP executives largely dodged questions about the company's plans for its Standard Products business unit, saying the company would not comment on rumours or speculation. The Bloomberg news service reported earlier this month that NXP may be shopping its Standard Products business and that multiple Chinese firms have expressed interest in acquiring it.

But Clemmer did reiterate that the Standard Products unit is "not a requirement to be able to meet our strategic requirements." But, Clemmer added, the unit is a solid business that generates a significant amount of cash.

Clemmer added that if NXP were offered what it deemed to be "fair value" for the business "then we clearly would consider our alternatives associated with it."